Jerry and Julie are brother and sister. Jerry sold stock to Julie for $5,000, its fair market value. The stock cost Jerry $10,000 five years ago. Also, Jerry sold Carol (an unrelated party) stock for $2,000 that cost $10,000 three years ago. What is Jerry's recognized loss before the $3,000 capital loss limitation

$8000

Explanation:

From the question, we are informed that Jerry and Julie are brother and sister and that Jerry sold stock to Julie for $5,000, its fair market value.

We are further told that the stock cost Jerry $10,000 five years ago and that Jerry also sold Carol (an unrelated party) stock for $2,000 that cost $10,000 three years ago.

Jerry's recognized loss before the $3,000 capital loss will be difference between $10,000 which was the cost and the 2000 which Jerry later sold it for. This gives:

= $10,000 - $2000

= $8000

answer; dividing net income by 1- t ;